$500 Million Whistleblower False Claim Settlement

Indian-based Ranbaxy Laboratories Ltd., has agreed to pay out $500 million to resolve allegations that the company was selling tampered and corrupted drugs to government medical programs. The drugs at issue were Sotret, gabapentin, and ciprofloxacin. The penalty is a combination of $350 million for settlement and $150 million following a guilty plea to charges from the U.S. Department of Justice (DOJ), $130 million of which is a fine. According to the DOJ, this is the largest generic-drug settlement in history.

Pharmaceutical companies have a history of putting their profits ahead of the well-being of the patients. Whether by failing to inform physicians of the possible risks associated with a drug or failing to ensure that a drug or product has been made in a consistently secure or safe environment, these companies do little to prevent potential injury to patients before the fact.

“The Department of Justice, with the assistance of another brave whistleblower, has once again shown the power of the False Claims Act and its potency in protecting American consumers and taxpayers from the byproducts of corporate greed and profiteering,” said James Kauffman, an attorney with the Levin, Papantonio law firm.

Ranbaxy has had a tumultuous past few years. In 2009, the FDA issued a statement that it would halt reviewing Ranbaxy’s drug applications as it obtained information that the company had falsified data and test results. The allegations were that the data obtained from the company supported the claim that the company made a practice of falsifying such information. Failing to properly test the shelf-life of the drugs was one such test that resulted in many of the company’s drugs being banned from import in the United States.

The practice of falsifying the statements was brought to investigators’ attention by a former Ranbaxy executive, Dinesh Thakur. Thakur alleged that the company falsely billed Medicare and Medicaid along with other government agencies. Of the settlement, Thakur will reportedly $48.6 million.

“Whistleblowers are an important part of uncovering corrupt practices in companies stealing from the government. The law provides for these whistleblowers a means to share in a potential recovery, but the method for exposing corruption can be complicated. It’s important that someone wanting to expose a scheme should contact an experienced attorney,” said Christopher Paulos, an attorney practicing in the areas of qui tam and whistleblower law.

In addition to the monetary settlement, the company has agreed to improve the processes it has in place to guarantee the integrity of its safety-test data and will sign a consent decree that will govern its business practices in the United States.